In this increasingly difficult market, many people are "upside down" on their house -- they owe more to the bank than what the property is worth. To make matters worse, many people are also unable to make the mortgage payments. Under these circumstances, an owner may be approached by people offering a "short sale" or some other transaction that will supposedly help the owner get out of this bad situation. Before entering into any such transaction, the owner should consult an attorney.
Admittedly, a short sale will do less damage to the owner's credit than a foreclosure. However, credit is just one of several factors that should be considered by the owner, including tax implications and potential loss of equity. To complicate matters further, many short-sale buyers are investors who are actively looking to purchase properties at below-market prices so as to realize a quick and easy profit. Less money to the seller means more money to the investor/buyer, so sellers should be leery.
"Investors" may resort to other, far more complicated schemes in their efforts to make money at the owner's expense, particularly where the owner is facing foreclosure of the family home. The structure of such a transaction can vary widely, but they all fall within the general term "foreclosure rescue scam." One common version is for the owner to convey title to the property to the "rescuer" and then to lease the property with an option to buy in the future. Typically, the renter (former owner) is unable to make the rent as well and is eventually evicted, leaving him with nothing.
As a general matter, you should not sign ANYTHING that alters or affects your ownership of your property untill you have had it reviewed by an attorney -- particularly anything identified as a "deed" (whether Quit Claim Deed or otherwise). While an attorney costs money, you will be far more likely to avoid being victimized by one of these "too good to be true" offers.
With my associate Marc Holmes, we can review the documents you have received from a potential buyer or "rescuer" so that you are fully aware of the risks and benefits of the transaction. For this service we charge a flat fee of $300. Additional services would be provided at the standard hourly rate.
